PDS Multinational Fashions Limited operates as an integrated design-led platform offering product development, sourcing, virtual manufacturing, and distribution for major brands and retailers worldwide. The company operates a vast global network covering over 51 offices, 21 countries, and over 1,800 associates and 5,100 factory workers worldwide. Sanjay Jain, CEO, PDS Multinational Fashions Ltd, spoke to Fibre2Fashion about the brand's success story and major achievements, and the way it has efficiently handled the current Covid crisis by addressing the PPE market thereby reducing the impact on its revenue and profitability.
When was the company started and where is it headquartered?
PDS Multinational Fashions Limited was incorporated on April 6, 2011 after demerging from Pearl Global Industries in 2014 and was listed as an independent entity in 2014. Over the years, the company expanded operations in India, China and Bangladesh and currently has presence in over 22 countries globally. The company has its registered office in Bengaluru, India.
Where does the company have its global footprints? Which of them are the major countries/cities?
The company has established its presence in 50 offices across 22 countries with sales and design operations in UK, Belgium, Germany, US, Canada, Turkey, India, Sri Lanka etc and sourcing and manufacturing presence across India, Bangladesh, China, Sri Lanka, Turkey, Myanmar, Cambodia, Egypt, Jordan etc.
What is the success story of PDS? What are the major achievements of the company till date?
PDS Multinational Fashions Ltd has created an integrated platform focussed on design, sourcing, manufacturing. The platform is enabled by PDS's expertise in robust risk management, social, environmental, and ethical compliance, and value-added services. PDS has created a platform of sustainable and responsible sourcing with its foundation laid in an entrepreneurial business model. PDS is able to identify the right product for the right market and the right factory which is further supported by a strong compliant supply chain and a core understanding of different geographies and markets. PDS platform capabilities enable multi-country sourcing from countries like India, Bangladesh, China, Pakistan, Sri Lanka, Myanmar, Turkey, and Vietnam. Similarly, multi-product sourcing for all categories pertaining to apparel, fashion, home furnishing has also been well established. Supported by creative inputs from their market intelligence, PDS has steadily perfected the product development aspect of their business through innovative fabrics, extensive trend research, graphics and most importantly sampling. PDS has constantly strived to support its brands and retailers to increase their sustainability footprint. The PDS platform enables speed to market and finally cost-effectiveness along with margin improvement through strategic sourcing / favourable credit terms for retailers and suppliers.?
Over the last 5 years, the top line of the company has expanded 1.3x to??6,213 crore and EBITDA has expanded 4x to??230 crore (along with EBITDA margin expansion from 1.2 to 3.7 per cent). During this same tenure, net profit of PDS increased at a CAGR of 40 per cent to??148 crore. PDS has reported enhanced leverage ratios with net debt/EBITDA of 0.26x vs 3.8x in FY17. This has translated into enhanced returns for stake holders with Return on capital employed (ROCE) and Return on equity (ROE) increasing to 22 per cent in FY21 from 6 per cent and 7 per cent respectively. PDS also declared a dividend of 15.75 per share (49 per cent payout on EPS). The Earnings per share (EPS) of PDS in FY21 was??32.37 per share, an 83 per cent increase over FY20.
What has been the impact of the pandemic on the fashion and retail industry as a whole?
Fashion and retail have been significantly impacted globally due to the unprecedented disruptions of Covid. The industry faced one of the worst times in history with disruptions in supply chain, complete store closures, change in consumer behaviour etc. This led to some players in the industry going bankrupt or depending on government subsidies for survival. However, the industry also witnessed strong demand every time the lockdowns were relaxed. Also, the online channels witnessed strong traction showcasing that demand for fashion is inherent in consumer buying basket.
How has the pandemic impacted you as a company in terms of closed operations, cancelled orders, disrupted supply chains etc?
Given our global footprint, PDS also witnessed disruptions across geographies. On one end, we saw retailers in UK and Europe operating in prolonged periods of lockdown; on the other hand, we saw manufacturing and supply chain disruptions on the back end. We as an organisation undertook various measures to minimise/soften the impact of these disruptions. We worked closely with our retailers and brands to closely plan and monitor the situation and navigate through these unprecedented times. Being an agile organisation, while we lost some top line due to store closures and lockdowns, we also created top line by addressing the PPE market which helped in reducing the impact on the top line and profitability.?
How are you equipped today to deal with a post-pandemic world?
As an organisation we always had in place policies, processes, and measure to closely monitor the business. For example, for managing our risk we have 6 Cs focussed on Customer, Credit, Currency, Cost, Compliance and Compliant Capacity.?
We as a platform came together to withstand the headwinds focusing on cost optimisation which resulted in Operating expenditure (OPEX) reducing by 13 per cent in FY21 vs FY20. Further, we reduced our working capital days from 10 days (FY20) to 5 days (FY21). This translated into enhanced profitability and reduction of net debt by??186 crore to??59 crore. Further strengthening our leverage ratios with Net debt/EBITDA reducing from 1.32x (FY20) to 0.26x (FY21).?
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